◄$$$ CHINA DISCHARGED A GIANT SLOG OF USTREASURY BONDS IN AUGUST, CONTINUING THE TREND... CHINA CONTINUES TO DUMP USGOVT DEBT IN LARGE VOLUME, LIKE $100BN PER MONTH... QE TO INFINITY SQUARED HAS BEEN PUT FULLY IN FORCE. $$$

China remains a large holder of USGovt debt, second to Japan (the US outpost in Asia), both in the $1 trillion neighborhood, thus giant creditors. Americans should be concerned that China has been dumping massive slogs of its USTreasury holdings. China will no longer keep lending Washington money to help finance the federal deficit in the future. Lately, China has been selling down its USTBond reserves for a number of reasons, among which is the dire need of cash. It is supporting the RMB currency, supporting their financial markets, while at the same time trying to stimulate the economy. China yanked a cord and redeemed a large sum from its war chest. China owned $1.3 trillion of USTreasuries as of June, making it the biggest holder of US debt. A cool $100bn per month has been sold off since then. Their foreign exchange (FOREX) reserves continued down from more selloffs, plunging by a record $94 billion in August, most likely from the USTBond account. The market participants suspect the unusual action in the bond market was driven by China dumping USTreasurys, soon to be disclosed. Their total FOREX resereves are still enormous at $3.6 trillion, but with USTBonds under $800bn currently. The questions on USGovt debt finance viability have finally come to the fore, which the Jackass believes was the Chinese motive also. They wish to put focus on QE to Infinity abused to support the global reserve (pathetic charred but rising) currency which now resembles an African currency.

Clearly the US strategy has been to attempt to force a hotmoney exit from Chinese financial markets, more patented destabilization, but not for them to abandon the USTBonds in droves. China is raising lots of cash. The big sore spot is capital outflows. Walter Zimmerman is chief technical analyst at United-ICAP. He stated, "Capital outflows have skyrocketed in China and the Yuan is under intense selling pressure. The only thing they could do is sell Treasurys to buy their own currency." The USDept Treasury surely does not wish to see continued devaluation of the RMB currency, and further decline. Beijing finds itself on the defensive. The trade war has become a full fledged financial war. Concerns swirl that China could sink the USEconomy by unloading its gigantic holdings of USTBonds, sending borrowing costs skyrocketing. Such doomsday fears do not appear to be at playing out for the obvious reason never stated in the financial press. The USFed has turned on the backroom QE volume, thus QE to Infinity Squared is upon us, less hidden from view than before. Borrowing costs remain steady, but under a market rig corrupt control. The USFed cannot raise rates, and did not raise rates, since such a reckless move would work against all their current control mechanisms. See CNN Money (HERE).

The hidden bond market rooms are in high gear. The USFed is lapping up all USTBonds discharged by China and the rest of the world. The trend will catch fire, putting the USGovt on the extreme defensive. Never lose sight of the fact that there is no valid active USTreasury Bond market. It is rigged, with phony demand produced from Interest Rate Swap derivative machinery and $1 trillion per month in Reverse REPO transactions. The Wall Street banks are abusing the window, evidence stark clear in the failures to deliver in USTBonds. Wall Street is naked shorting the bonds, raising cash to cover their derivative losses and oil hedge losses. The same Wall Street banks have put on gigantic bond carry trades for easy risk-free income, producing more bond support. There is no valid bond market anymore.

◄$$$ CHINA TO ALLOW FOREIGN CENTRAL BANKS IN ONSHORE CURRENCY MARKET... THE STEP WILL AID IN IMF BASKET INCLUSION IF DESIRED... IT IS A POSITIVE STEP TOWARD INTERNATIONALIZATION, A KEY CHINESE GOAL... NUMEROUS CHINESE ALLIES MIGHT DECIDE TO RAPIDLY INCREASE THEIR RMB-BASED BOND HOLDINGS, WHICH MIGHT MAKE THE IMFUND DECISION MOOT AND IRRELEVANT... THE KEY IS INFLUENCE TOWARD PRICING IN RMB TERMS THE ENERGY AND GOLD MARKETS. $$$

China will open its domestic foreign exchange market to overseas central banks, making it easier for other nations to hold Yuan (aka RMB) assets in Asia's biggest economy. It is an important step for the currency to win reserve status at the International Monetary Fund. In fairness to the IMF (gag, cough, snort), they pointed to the inadequate foreign participation of the RMB in banking and trade. The Beijing goal is to keep the currency stable at a reasonable, equilibrium level, stated Premier Li Keqiang, who is the roaming ambassador for the nation. He promised continued easing of controls during a speech at a World Economic Forum recently held in Dalian China, called the Asian Davos. The affable and charismatic Li commented, "Not long ago, we allowed foreign central banks to participate in the inter-bank bond market. The next step is to allow foreign central banks to directly participate in the inter-bank foreign exchange market. Before the end of this year, we will complete the cross-border Yuan payment system that facilitates the development of the offshore Yuan market." He refers to CIPS, the SWIFT alternative. Li lines up the steps for RMB internationalization. Much progress has been made, but more efforts are needed. Broader integration is happening.

A currency war is not desired, Li claims. The Chinese central bank kicked the table for global markets with a devaluation on August 11th. Overseas monetary authorities have already been granted access to the Chinese inter-bank bond market. Banny Lam from the Agricultural Bank of China Intl Securities in Hong Kong made a summary comment. "The participation of foreign central banks will make the onshore Yuan's exchange rate more globally recognized. Allowing direct access gives the central banks more flexibility and control over costs, compared with going through local banks for trades. In general, it is a positive move for Yuan internationalization."

The decision to open their currency market will further China's goal for the RMB to join the USDollar, Euro, Yen, and Pound in the Special Drawing Rights basket of reserve currencies maintained by the IMF. A key indicator used to determine qualification within the IMF basket is a currency's share of official reserves in global banking. The RMB ranked #7 last year, behind the four SDR members as well as the Australian and Canadian Dollars. The Chinese RMB share remains low at 1.1%, a main factor in the IMF decision toward no inclusion. China is making progress on the arduous replacement system for SWIFT in bank transactions. The first phase of the China Intl Payment System (CIPS) will begin soon in Shanghai to handle deals in Asia, Pacific Rim, and Europe, the implementation imminent. The CIPS will facilitate cross-border trade settlement, direct investments, and other RMB deals. One must wonder if the CIPS system will facilitate conversion of Western sovereign bonds into Gold bullion. See Bloomberg (HERE).

EuroRaj summarized the consequences and important meaning of the inter-bank currency open door policy. It possibly means two things. First, China does not need inclusion in the SDR basket at the IMFund. They are irrelevant in the overall scheme of things. Second, China has numerous willing trading partners who want to hold the CNYuan (RMB) in their banking system as reserves and in their bank portfolios. Furthermore, once these allied nations begin to hold RMB, certain crucial financial markets will undergo a shift in influence and direction. China will have bigger clout in forcing crude oil, natural gas, and Gold to be priced in RMB. The West will gradually lose control more quickly in the corrupt pricing dynamics. It will be interesting to see if the Euro Central Bank will decide to hold RMB-based bonds as reserves. The sharp keen savvy experienced colleague to the Jackass thinks they will. His instincts are excellent.

◄$$$ CHINA AND ENGLAND SHOW DEFIANCE AND DISRESPECT TO THE USGOVT DOLLAR MERCHANTS AND THE INTL MONETARY FUND OFFICE... THE YUAN SWAP LINE IS TO BE EXPANDED, AND CHINESE GOVT DEBT ISSUANCE IS COMING TO LONDON... LINKAGE OF SHANGHAI AND LONDON STOCK EXCHANGES SHOULD BE WATCHED WITH A WARY EYE... CHINA WANTS TO CONTINUE THE INTERNATIONALIZATION THEME. $$$

London and Beijing have agreed a number of initiatives including expanded currency swaps, stock market interconnection, and Chinese investment in the UK's nuclear power industry. Chancellor George Osborne of Great Britain is visiting Beijing with a pitch to sell the UK as China's most viable partner in the West. The UK wants to serve a role as a leading world financial center toward the complex task of making the RMB more international. In addition to the RMB/Sterling swap line expansion, the two countries plan to issue Chinese short-term debt in London soon, as in sovereign bonds in RMB terms. The chancellor intends to visit the Shanghai stock exchange this week as the two countries aim to link the Shanghai and London Stock Exchanges. Recall back in December 2013, Prime Minister Cameron had lobbied for a massive ambitious $trillion EU-China trade deal. Little has come of the volley. See Russia Today (HERE). A crass commentary came from my team of colleagues. The fact that the biggest Western successful whore is Britain could spell doom for the Washington fascist crew, and expand the links to Asia in a way that could interfere with isolating Russia. Full speed ahead, but look soon for a prompt response in Frankfurt on their RMB Hub plans.

◄$$$ ISLAMIC BONDS TO BE ISSUED IN RMB TERMS, OUT OF DUBAI... THE ARAB EMIRATES STRIVE TO SUPPORT THE SILK BELT & ROAD INITIATIVE WITH CHINA... DUBAI HAS BEEN THE SITE OF PREVIOUS CHINESE BOND ISSUANCE IN THE PAST... CHINESE BANKS ARE MAKING INROADS, AS SEVERAL WESTERN BANKS HAVE EXITED IN THE PAST TWO YEARS. $$$

Essa Kazim, the governor of the Dubai International Financial Center (DIFC), announced discussions toward issuing a renminbi-denominated Islamic bond with a bank in China. He visited China, but did not disclose which bank. Promoted by the Silk Belt & Road initiative, all Chinese banks with branches and representative offices in the DIFC have shown interest in such Islamic RMB bonds. To date, all Islamic bonds issued so far have been issued in the USDollar. A mild rush is on to become the first. Kazim assured that the Islamic bonds are Sharia compliant in finance. Other such bonds have been issued by several major economies and Muslim countries, including Hong Kong and Malaysia. Chinese banks have been increasingly active in the global financial exchange of the DIFC. In July, the Bank of China issued a RMB-denominated Silk Belt & Road bond worth CHY 2 billion (=US$322 mn) on the Nasdaq Dubai. The Industrial & Commercial Bank of China and the Farmers Bank of China have also issued bonds in Dubai. Recently, the three major Chinese banks and the China Construction Bank either have opened or are setting up branches in the DIFC to facilitate their expansion in the region. Contrast to the exodus by many Western banks from Dubai, such as Barclays. See China Money Report (HERE).

◄$$$ CHINESE COMMODITY EXCHANGE TO OPEN TRADE PLATFORM FOR SILK ROAD COUNTRIES... INDEPENDENT SYSTEMS ARE COMING INTO VIEW OUTSIDE THE WESTERN CONTROL ROOMS AND REACH... LOOK FOR THE GOLD TRADE NOTE AND CIPS PAYMENT SYSTEM TO BE WEAVED IN. $$$

China's so-called One Belt & One Road government economic framework was announced in 2013 to integrate favorable trade and investment conditions across all Eurasia. The project includes two main components, the terrestrial Silk Road Economic Belt (SREB) and the oceanic Maritime Silk Road. By land and by sea the Silk Road will be formidable and change global trade dynamics and their practices. The SREB includes countries situated on the ancient Silk Road route, connecting Central Asia, West Asia, the Middle East, and Europe. Yan Dongsheng is Chairman of Tianjin Bohai Commodity and an influential commercial kingpin. He stated, "After three years of work we have completed the establishment of a mechanism of trade pricing. It will be officially launched within two months." The board chairman explained that the mechanism would streamline and standardize international trade protocols within the entire Silk Road, opening new international service centers along the route to integrate markets and supporting investors at regional stock exchanges.

The initiative is intended to diversify all the functions related to trade, which should likely include the Gold Trade Note for letters of credit and the Chinese Intl Payment System (CIPS) that will rival SWIFT. The Jackass is always with an ear to the ground and wall for introduction of the Gold Trade Note. The Bohai Commodity Exchange currently trades some 70 commodities, including oil, metals, and foodstuffs. It is the only Chinese mainland exchange allowed to do cross-border national currency trading. See Sputnik News (HERE).

◄$$$ THE CHINESE GOVT IS ROLLING OUT TRILLION-YUAN FISCAL STIMULUS... IT IS VALUED AT AROUND USD188 BILLION, TO BE DIRECTED AT CAPITAL INVESTMENT PROJECTS, WITH CERTAIN TRICKLE DOWN BENEFIT WITHIN THEIR DOMESTIC ECONOMY... THE TYPICAL USGOVT AND USFED STIMULUS IS BOND SECTOR AND HIDDEN DERIVATIVE SUPPORT, THE SICK SIDE... THE CHINESE WAY IS MORE EFFECTIVE AND HEALTHY. $$$

China is considering pumping more than CHY 1 trillion of fiscal stimulus into their economy over the next three years, reported state news agency Xinhua. Anywhere from CHY 1.2 trillion (=US$188 bn) to CHY 1.5 trillion is set to be removed from FOREX reserves to replenish the capital for investment projects already approved by the authorities. Such was disclosed in the latest report from the China Intl Capital Corp (CICC), a Chinese investment bank. This rather minor amount of stimulus has the potential to spark not only policy banks, but also commercial lenders and private investors. The result is estimated to foster CHY 5 to 7 trillion to 7 trillion in credit flow over the next three years, almost a cool US$1 trillion. This would equal 2.5% to 3.4% of their 2015 gross domestic product. The world's second largest economy is seeing growth slow down to 7% because of a property downturn, industrial overcapacity, sluggish demand, and struggling exports. Consider the Chinese funds to be devoted toward the favored Xi project, the development of the New Silk Road and BRICS infrastructure. The rest of the world will not benefit, since China is investing in itself.

The planned fiscal stimulus would be for investment projects that have already been approved and are basically shovel ready. Such stimulus would have a significant ripple through effect on their economy in a significant manner, which is diametrically different from the USFed and USGovt approach. The United States and Europe are deploying African style policy from the Rothschild playbook. The QE is pure monetary inflation with no backend benefit to the economies, since all effort is made to obstruct flow into the mainstream economy, called often Main Street. If the US policy executors permitted flow into the USEconomy, massive price inflation would result, thus destroying the USTreasury Bond complex entirely. Hyper monetary inflation must be contained, must be quarantined, which is precisely what the USFed has done for several years since the Lehman event in 2008. Thus the US approach is not stimulus at all, but instead toxic paper coverage and hidden redemption, with zero trickle down effect on the economy. See Asia Times (HERE).

◄$$$ CHINA STILL HAS CONSIDERABLE STRENGTH, FOUND IN ITS INDUSTRIAL BASE... THEIR ECONOMY IS CHANGING IN DYNAMIC AND POSITIVE WAYS, FROM AN INVESTMENT EMPHASIS TO A HIGH-TECH INDUSTRY, CONSUMER, AND SERVICE EMPHASIS... DO NOT SWALLOW THE WESTERN REPORTS WHOLE, BUT FOR MASSIVE INDIGESTION OF THE PROPAGANDA TYPE... NOTICE THE MANY POSITIVE SIGNS, ALMOST NONE OF WHICH ARE PRESENT IN THE USECONOMY. $$$

Recent financial volatility has cast a shadow on the Chinese economy, but people need to view the full picture, and be careful about Western financial propaganda. The Chinese Govt admits they have challenges, but the West seems always to ignore that China has zero external debt, unlike all the Emerging Market Economies. China also has over a $3 trillion war chest. The US only has a printing press, derivative machine, rule making dispatches, and war howitzers. The Chinese Economy has had annual growth near 7% after three decades of rapid expansion. Expect bumps but not a hard landing since it has a solid base. Notably, the G-20 finance ministers and central bank governors, representing 85% of the global economy, reached consensus in early September as they concluded no reason exists to fear slower Chinese growth. Several glimmering signs of improvement in the Chinese economy can be seen, if only one looks. They contradict the Wall Street tilted research.

China's real estate sector continues to recover this year, despite repeated stock market plunges since mid-June. In August, prices for new homes in 100 Chinese cities rebounded after 10 months of slumps. Sales were on the increase. The property market is of greater significance to economic growth and financial stability than the stock market, since real estate is one of China's pillar industries, widely used as collateral for bank loans. Furthermore, in August their power generation rose to the highest level this year. Rail freight also rose slightly. Steel production and prices began to rebound following four months of decline. China maintains momentum in commodity imports, dismissing the baseless accusations that it is shrinking from weaker Chinese demand. In July, at least 21 different commodities reported over 20% sales growth. Despite the manufacturing PMI in August down below 50 (the expansion vs contraction line), other PMI indexes for high-end manufacturing and consumer goods production came in at 52.2 and 54.6, indicating strong vitality. Production of new energy vehicles, bullet trains, smart electronic devices, and photovoltaic products all reported robust growth, while polluting cement and plate glass dropped substantially. As footnote, China will replace the lost cars in the Tianjin inventory field of dreams (nightmares).

The economy of moving feet by people has positive signs too. Chinese movie theaters are crowded, restaurants are filled, and tourist attractions at home and abroad are full of Chinese visitors. The same cannot be claimed in the United States. Confirmation comes from market intelligence provider BCA. They cite overseas travel, cinema box office revenue, and e-commerce in China, all of which see explosive growth. The above evidence points to China making a transformation with certain painstaking efforts from an investment-led economy to one based on high-end manufacturing, consumption, and services. In other words, healthy growing pains. Many are the overblown stories and biased analyses produced by the ignorant politically motivated charlatans in the West, which crow China is slipping into crisis. They are hacks, morons, and political tools with active fingers scribing fantasy. They distract attention from the ruinous US landscape. Instead, with positive signs emerging, the Chinese Economy is improving and becoming more sustainable. By contrast the USEconomy is falling into the abyss on 20 fronts by similarly applied metrics. See Chinese People (HERE).

◄$$$ THE CHINESE TRADE SURPLUS IS BACK TO RECORD LEVELS... THEIR FINANCIAL SECTOR DAMAGE IS REAL, BUT SO IS THEIR INDUSTRIAL STRENGTH... THE UNITED STATES HAS FINANCIAL DAMAGE AND NO CRITICAL MASS IN INDUSTRY, WITH THE CHRONIC $400-500 BILLION TRADE DEFICIT... CHINA COMPARES EXTREMELY WELL VERSUS THE UNITED STATES. $$$

◄$$$ CHINA'S ECONOMY MIGHT ACTUALLY BE 15% LARGER THAN OFFICIAL FIGURES, DUE TO INDEPENDENT RESEARCH ESTIMATES AND FINDINGS... THEIR SERVICE SECTOR TOOK A 22% UPWARD REVISION... THEIR ECONOMY IS HEAVILY DEPENDENT UPON THE PROPERTY SECTOR (ALREADY KNOWN)... THEIR ECONOMY HAS MADE FURTHER PROGRESS TOWARD REBALANCING THAN PREVIOUSLY CREDITED. $$$

A study of China's economy by Daniel Rosen and Beibei Bao for the Center for Strategic and Intl Studies made conclusions for 2014. Instead of a $10.0 trillion economy, it was closer to $11.5 trillion, according to their detailed standardized methods and work. China still needs to conform to the international standard national accounts to calculate GDP data. The quick conclusion is that their rebalancing initiative are further along than generally credited, while key components of this reform process still need to be accelerated. They also found that China has greater inequality than seen earlier. Some sector breakdown was given. At the broadest sector level, the difficult services cluster is in greatest need of upward revision, lifted 22.2% in our estimate. The industry and construction sector needed a 8.3% lift in revision. The group examined elements not even covered in China's official GDP, such as the capitalization of Research & Development investment. The largest revision by volume (not percentage) was in real estate, which was responsible for 38% to 48% of their total adjustment. The concluded that China's GDP growth has been even more dependent on a property boom than already understood.

China has many problems, but their growth and maturation as an economy has more progress than the Western analysts give it credit. A strange comment, but a propos, is that unlike the United Kingdom, China does not include prostitution and other illegal activities in its GDP. Also bear in mind the ongoing Chinese criticism of the USEconomy. Their officials regard up to 50% of the US GDP activity as just moving debt securities around the room on the table and through the windows, hardly work or production. This factor extends from the US being so tilted toward the financial engineering within the sector, described as clean industry in past decades. Their point tends to make some sense. The US still has a big underground economy (legitimate trade work, and black market). So the US might be smaller economy than China, or close to parity in size. See Next Big Future (HERE) which includes a comprehensive table on revisions by sector and category.

## RUSSIA SEEKS FAIR MARKET DYNAMICS

◄$$$ RUSSIA AND THE WEST HAVE SWAPPED SPIRITUAL AND CULTURAL ROLES... THE UNITED STATES IS THE STANDARD BEARER OF FASCISM, AS WELL AS CULTURAL MARXISM... THE USGOVT AND LEADING US-CORPORATIONS PROMOTE SATANIC THEMES... RUSSIA DOES NOT CONFORM, ADHERING TO CHRISTIAN VALUES. $$$

Patriarch Kirill has warned the West, "Do not take the path we took. We tried it and it leads to destruction!" He is Patriarch of Moscow and Primate of the Russian Orthodox Church. He wrote of the radical swap in roles for the two superpowers. The following are many of his points. See Russia Insider (HERE).

Russia is a country that refuses to compromise on Christian values. By contrast, the West uses freedom of speech for the purpose of desecrating religion.

While the West is deriding and disowning Christianity and Europe revels in self-loathing, Russians are returning to Christianity in a modern and contemporary context. Bear in mind that Christianity was suppressed under Communism, which promoted atheist themes. Russians are familiar with the bitter fruit of atheism and have no appetite for the bleak and barren wasteland it produced.

After the Cold War, East and West swapped roles spiritually, culturally, and morally. Cultural Marxism now holds unrestrained sway in the West. During the rule of Communism, Russia found itself in the grip of a culture of death, but the nation is returning to life.

The situation in the West is the complete opposite. Death is celebrated, the leaders having surrendered to the Satanic view of man (hidden ways like symbols, see Hollywood and corporate logos) in a self-righteous rage and rant against God. Values are upside down. Notice divorce, work over family, euthanasia, abortion, homosexual rights, same-sex marriage as common themes.

The spirit of communism is evident in many Western values and Utopican notions. The West is headed for the very wasteland that the Russians left behind.

The food ban imposed by Russia in response to Western sacntions has caused havoc in the entire European agricultural sector. French farmers are finally in regular protests. The French are the clearly designated pressure valve on farming frustrations within the continent, with a long custom of dumping potatoes on roadways and blocking highways with a caravan of tractors. A few months ago, they even dumped cow manure on government office doorsteps. Bertrand Venteau, former chairman of the French Rural Coordination and current administrator of the ASP, has formally admitted the national crisis. In early September, several thousand French farmers staged protests in Paris against the agricultural policy of their country. They also demanded the lifting of anti-Russian sanctions. The government pledged to support the farming industry with a EUR 600 million aid package. The former chairman believes the measures proposed by French President Francois Hollande would have minimum effect on the industry. Once more, poor leadership or comprehension at the top, and tossing money to defuse anger.

Venteau stated, "The crisis is linked with two major problems. First, the European market lacks proper regulatory mechanisms. Second, the policy of cooperatives downed [reduced] factory prices while they were created for the opposite goal. The Russian food embargo has resulted in a glut in the farming market, especially in the pork market, as Russia was the main market for Brittany and Germany [on pork sales]. After Moscow closed its market for European farmers, they have to sell their products at a loss. Some of them went broke. There is a serious threat for the pork and apple markets in France." The problem could be solved through maintaining food self-sufficiency on the European market by matching supply and demand, Venteau claims, although the Jackass finds the objective naive and errant. From this point of view, the issue has become part of a broader structural crisis and should be addressed by EU authorities. Clearly France needs its export market to be restored. They should sell to Russia through Turkey or India. See Sputnik News (HERE).

Defiance has finally surfaced. France will support the removal of sanctions imposed on Russia if the provisions of the Minsk peace accords are fully implemented, French Foreign Minister Laurent Fabius has defiantly proclaimed. He urged all sides to honor pledges made during the Minsk peace talks earlier this year. The USGovt is the primary violator of the Minsk 2 Agreement, in role of puppeteer of Kiev and its murdering theiving beguiling fascist leaders.

Laurent Fabius told members of the French Parliament Foreign Affairs committee the following. He has outlined the framework for lifting the destructive Russian sanctions. "We want these sanctions to go. They were imposed with concrete goals in mind. We were meeting in Berlin on Saturday as part of the Normady Four format [with German and Ukrainian Foreign Ministers] and discussed important issues like ceasefire and elections in Donbass. It was a constructive meeting and now we are going to have a summit in Paris on October 2nd. We in France believe that if these issues are settled we want [the anti-Russian sanctions] to be lifted." Although Fabius seems bold, he does not appear to know the real motive of the Russian sanctions: to disconnect Europe from the Russian supply chain, to wreck the European Economy, and to disable the Eurasian Trade Zone. The uber-goal is to install the fascist state across Europe.

Jacques Myard is a Republican member of the French National Assembly. At an earlier date he urged President Francois Hollande to lift the sanctions imposed on Russia, which he claimed were harming the national economy. Myard complained, "The anti-Russian sanctions are a major problem we now have to deal with. We have been pushed into a corner by European solidarity. We have many companies in Russia. We [France] have partners there who are now turning away from us and looking towards China. We are in a real squeeze with no room for maneuver." The Central European core nations are finally noticing the movement by Russian companies toward Chinese supply in replacement. It will be difficult to win them back for both France and Germany. See Sputnik News (HERE). Clearly the cracks extend from France to Germany. It is not important whether differences crop up over Ukraine or Syria. The important aspect is opposition to destructive USGovt policy within the primary power centers of European Union member states. They must bring closer attention to US violations of the Minsk 2 Agreement, then break ranks with the Americans.

◄$$$ GAZPROM IS FINDING NEW EUROPEAN CLIENTS ON THE MID-SIZED CORPORATE SECTOR... THEY HAVE BEGUN A MASSIVE END-AROUND MANEUVER WITH A NOVEL CONCEPT: AN AUCTION... THE WESTERN CABAL WITH THEIR ENERGY GIANTS ARE IN THE PROCESS OF BEING BYPASSED... IN THE STEPS, ENERGY PRICING AND TOLLS ARE TO BE AVOIDED. $$$

For the first time in its history, Russian energy giant Gazprom held an auction to sell natural gas. They seek a fair market, not one dominated by US & London paper merchants and corrupt hives. The sale took place between September 7th and 10th, resulting in securing deals for 1.0 billion of a total of 3.2 billion cubic meters due to be offered between October 2015 and March 2016. The brokers who created the event, Gazprom Export disclosed that resulting prices were higher than average for long-term contracts in Central and Northern Europe and higher than the current spot prices at European hubs. The Russians are upsetting the Western temples and money changers, over-turning tables and angering powerful people. Let us wait three days or three months to note the slam in response. The Jackass doubts Alexey Miller will arrive on a donkey to face an execution in the maidan. In all, Gazprom cut around 40 deals during the auction, among 15 contractors from 39 companies. Deals were mostly struck with medium-sized companies and traders without long-term contracts, according to Kommersant. The dynamics of supply vs demand were brought into the room.

The head of Gazprom Export, Elena Burmistrova declared that future auctions could be held at other Western and Eastern European points of delivery. The purchase of natgas for transit through Ukraine could be of interest to European buyers, if they could solve the challenges to transportation through the country. As of today, the local infrastructure is lacking. The auction concept goes counter to all Western paper markets and the corrupted price discovery mechanisms. See Russia Beyond The Headlines (HERE).

EuroRaj pitched in some comments, on interpreting the events. This auction concept is quite radical and could cause serious disruptions to the Western power centers. To begin with, Gazprom is cutting out the established European oil & gas companies, going straight to mid-size industrials. The major energy firms as banker cabal members. In some cases, Gazprom or a Chinese or Russian bank may even do vendor financing. Thus the European banks would be cut out of the commercial deals from Russian suppliers. Look in future months for the contracts to be done either in RMB or Ruble terms. The USDollar is being left behind in the energy world, piece by piece. Watch for shock waves out of the Saudi-land and Gulf Emirates soon. The terrifying prospect is slowly becoming a reality, albeit in small steps, for the cabal as their European banks, including their energy cartels, to be bypassed. In the process, the USDollar and its temples are left out, along with their pricing and tolls. The Russians are attempting to engineer an end-around maneuver. The remaining challenge is on pipeline availability and usage.

◄$$$ PUTIN AIDE'S ADVICE: DEFAULT ON FOREIGN DEBT, PUT RESERVES INTO GOLD AND BRICS BONDS... RUSSIA IS DEVISING A STRATEGY FOR ECONOMIC SOVEREIGNTY BY MEANS OF NEUTRALIZING THE WESTERN SANCTIONS. $$$

Russia has a growing interest in gold within financial systems, which must be integrated with the plan to achieve Russian economic sovereignty. Sergei Glazyev serves as economic advisor to President Vladimir Putin. He will make a presentation to their Security Council soon. The brilliant Glazyev is among the small number of Russian officials targeted specifically by USGovt economic sanctions. Kommersant (translated The Businessman) reports his plan includes a section about neutralizing anti-Russian sanctions. The Glazyev plan proposes authorizing Russian companies to declare force majeure against loans from countries that have imposed financial sanctions against Russia, in effect the legalization of non-repayment of all private foreign debt, and then converting the reserves of Russia's central bank and the government's Reserve Fund and National Welfare Fund into Gold bullion and bond obligations for the BRICs countries. Then to create a system of international payments separate from the Western controlled SWIFT system that would operate with China's UnionPay system. Refer to the Chinese Intl Payment System (CIPS).

The steps would be a grand declaration of war, as in financial war using the Gold card as weapon. See the News Doctors (HERE) and Kommersant (HERE) in Russian. The Russian approach parallels a Jackass concept stated independently in a recent interview. The best financial advice for a US or Canadian or European citizen is to take a home equity loan out buy gold coins, default on the loans, and leave the country with bad credit. The leaders have sold out the citizens.

## PRECIOUS METALS IN RECOGNIZED SHORTAGE

◄$$$ THE OFFICIAL SILVER SUPPLY CYCLE HAS BEEN BROKEN... THE JUNK SILVER MARKET HAS RUN ALMOST DRY... THE SHORTAGE HAS FINALLY STRUCK THE RECYCLE SUB-MARKET... JUNK SILVER USUALLY SELLS BELOW THE SPOT PRICE, BUT RECENTLY HAS RISEN TO A 15% PREMIUM... THE SHORTAGE WILL BECOME MORE ACUTE SUDDENLY IN THE HIGHER LEVEL SILVER MARKET... THE SILVER MARKET IS SEIZING UP, WHILE THE GOLD MARKET REMAINS IN EXTREMELY LOW SUPPLY. $$$

Brother John is a sharp observant analyst. He has identified a break in the traditional silver supply cycle, an important fracture in the junk silver recycling. Let him tell the story. "Now, for the last 30 or 40 years, that price at a local coin store would always be a percentage below spot. The problem with Junk Silver is that the are not going to do that and put them in their display case. They are not going to separate out the halves [50-cent pieces] from the quarters [25-cent pieces] from the dimes [10-cent pieces] and try to grade them and look at their dates and do things like that. They pay a price below spot. Then when they have enough of them, they send them to the refiner. The refiner pays them spot or near spot, and the refiner melts them down. Then they go back out as recycled silver. That is what shows up in this scrap figure. Now why is that so important? It is so important since with Apmex paying $17 an ounce for Junk Silver, a ripe $2.60 [shows] above the spot price.

It means that the Silver Cycle is broken.It means that the silver is not coming in anymore to be melted down and sent to the refiners. It means this number at scrap will begin to approach zero. But it also means that there is such demand for Junk Silver that it is not coming in as fast as it is going out. Therefore this Silver Cycle, where coins come into the local coin store, typically they are given a price below spot. The price must be below spot because they do not sell it as junk. They sell it as scrap, which is later melted down. It gets sent back in and ends up on the COMEX. This cycle is now broken. This is very important because I have been watching silver since the late 1990s. This is the first time where I can recall that this Silver Cycle has been broken, where they are bidding for Junk a number of dollars above spot. That means that none of the silver is going to be recycled anymore. That means that we are going to be running into a serious shortage." The silver shortage will therefore become far more acute, more noticeable, and lead to bigger problems. This is a cause for celebration. See the YouTube (HERE).

Colleague UncleD commented. Prices for junk silver (90% grade) have been over spot for more than a year, if not two years. In the past, Tulving went bankrupt about a year ago, its pricing for 90% was spot plus 79 cents. Colleague Aaron Krowne commented. People have not been melting junk silver for a while, because it tends to sell at at least a slight premium. The practice of melting junk has become more rare since 2008. The overall point is correct, however, that there is a retail shortage and premiums are generally way up. If you think the junk silver price is high, you should see low-circulated or un-circulated issues of the coins that normally go into the junk category lots. The sorted dime and quarter rolls can easily fetch $7 to 11 per oz over spot. That is, provided they are even available. See an interview with David Morgan on USA Watchdog (HERE), where he discusses many details of the Gold & Silver markets which each suffer shortage.

According to Hugo Salinas Price in Mexico, the major Banco Azteca suspended all silver sales including the 1-oz Libertad. Their website for the first time ever has no price quote for silver. A Hat Trick Letter client in Central America passed word. He talked to his gold dealer in Panama on a recent day to see if an order had been filled, placed on August 21st. The dealer called his contact in the US, the 2nd largest gold warehouse in the country, and was told that what is normally a two week transaction, is now 10 days from order, plus another 6 to 8 weeks for delivery. All warehouses are empty in the US and the backlog experienced had origin at the USMint. His particular order was for Canadian Maple Leafs. Ditto in London. Another Hat Trick Letter client passed word. The Silver coins in UK are in dire shortage. The Britannias bullion dealers have a big premium integrated, which has nearly doubled in the last week, after having been stocked due to running out two weeks ago.

BullionStar CEO Torgny Persson in Singapore offered an update on shortages in the Pacific Rim of Asia, according to their supply lines. He reports that giant global wholesaler A-Mark has no gold and silver at all, nothing in the live market where higher premiums are paid for nearly immediate delivery. They have even stopped taking orders for Silver Maples and Silver Philharmonics (from Austria). They cite Silver Eagles being available in the end of November. For PAMP in Switzerland, similar long delivery times for all minted gold bars are cited. BullionStar still has most products in stock due to massive stock-up recently. But they are unable to replenish supplies. A big squeeze is on with shortages starting both on the wholesale & retail level and extending to the bulk level. Big trouble comes without the paper price reverting upward. Persson concluded, "If it goes to the point of shortages at the bulk level like 1-kg gold bars and 1000-oz silver bars, the emperor will stand without clothes."

Lastly, a longer note from a HTL client in Brazil on gold purchases at the central bank, and the runaround given to him. Good details from VT, a new client. The following is based upon his message, with my edits. Something odd in Brazil on the gold front, since 95% of the goldreserves (70 tons) lie in Banco do Brasil. They do sell bars, of the 250-gm bar type. When he went to the bank, they tried to persuade against the purchase, which made him even more determined. They required a customer to buy the paper to trade for real stuff, which he did. Then they him that he could not use their office anymore. They will eventually deplete their reserves regardless. The advantage is that at the window, they are not asking for a premium. He commented on the facility. He passed trough four steel doors to arrive at the purchase window. The security sure gives away the protection for where the real money is located.

The Brazilian client continued on the macro picture in his country. He believes a few foreign countries have mines there stealing the gold under the radar, as in the status quo for 500 years. Unfortunately, he believes Brazil is the weak link in BRICS. Their sovereign debt was just downgraded to junk status by Standard & Poors. Look for the Real currency to fall further, going above the 4.0 level in a bout of weakness. That will prompt a response since a reached psychological barrier for Brazilians at R$4. It just happened on Wednesday Sept 23rd, going above 4.0 on the day of posting. When the Petrobras corruption made the news, the Real currency started to devalue quickly. The PetroBras credit default swap is rising very fast, from the 200-300 range in 2013-2014 to 910 on Sept 21st. A bankruptcy could actually happen.

Good guess that the United States is trying to destabilize Brazil like with Russia with currency interference and havoc. What gives credibility to the conspiracy theory, Eduardo Campos (Presidential Candidate) was killed by the CIA before the election in yet another aircraft accident. Washington wishes to install into power Marina Silva (the VP Candidate) who was known to be backed by Soros. The story was very suspicious since the aircraft black box supposedly vaporized. VT is an aeronautical engineer and is well aware that cannot happen. The USGovt will surely try to bring down Dilma as president and put in a more friendly government to Washington. To be sure, Brazil will sell more USTreasury Bonds. The Jackass adds that they will do so secretly, so as not to anger the USGovt fascist killer thieves.

◄$$$ INDIA IMPORTED 138 TONS GOLD IN AUGUST, WITH YEAR TO DATE TOTAL OF 998 TONS... BOTH GOLD & SILVER ARE SET TO EASILY ECLIPSE THE IMPORTS FROM THE LAST COUPLE YEARS... THE SILVER IMPORT IS SETTING ALL-TIME RECORDS. $$$

India's custom department (the DGCIS) has released the first official import numbers for Gold & Silver in August 2015. The total gold import was 138 tons, the same as what the Economic Times reported one week ago. A vast discrepancy exists on the silver import data. The DGCIS cited silver bullion import at 757 tons for the month. A remarkable contrast is offered, since according to preliminary data from InfoDrive, the country India imported 1400 tons of silver bullion in August. The difference being 643 tons, with eyebrows raised as Koos Jansen described. He is on the case, to resolve the disparity. Silver import is on track to reach an annualized 10,172 tons, up a very impressive 44% year over year. The Indian imported silver would consist of a staggering 37% of world mining in silver output. India and China alone can bring down the Anglo-American criminal regime on the precious metal front. See Bullion Star (HERE), and thanks for the fine charts. Notice in 2015 the annualized projections since a few months remain.

◄$$$ NEVADA GOLD MINE OUTPUT HAS DECLINED TO 1998 LOW LEVELS... IT IS THE BIGGEST GOLD OUTPUT STATE AMONG THE 50 US-STATES. $$$

The year 1988 was when gold production in Nevada was last under 5 million ounces. According to a new Division of Minerals report put out by the state, just 4.94 million ounces were recorded in extraction from Nevada's 30 mines in 2014. This compares to 5.5 million ounces the previous year, a hefty 10% decline. The Gold price is in no way the sole factor to drive gold mine output. Back in 1998, when gold was hovering between $425 and $450 per ounce, Nevada gold production was at a record 9 million ounces. The gold ore differs today from the past. The gold currently mined in the state is refractory ore, which requires an additional process that increases production costs, thus restricting output. The state is the important cog. Nevada is the largest gold producer among all states, accounting for three quarters of production and 6.1% of world gold production, as per the Nevada Mining Assn. The project by Newmont's Carlin Trend accounts for the largest gold output in the region at 907,282 ounces, followed by Barrick Gold's Betze-Post operation at 515,641 ounces. They are annual outputs. Mines that have closed since not profitable any longer at current gold prices include Allied Nevada's Hycroft mine, which suspended operations this summer. An interesting tidbit factoid was revealed. While gold output declined in Nevada, silver output in the state increased to 10.9 million ounces in 2014. Compare to around 8 million ounces in 2013. See Mining (HERE).

◄$$$ SILVER WHEATON HAS ANNOUNCED STOCK BUYBACK OF 20 MILLION SHARES, WHICH IS 5% OF THEIR ENTIRE FLOAT... THEY ARE REACTING TO A RIGGED MARKET. $$$

Silver Wheaton is always ahead of the pack, like First Majestic. Their move to buy back 20 million shares is a solid gesture of defiance and a bold maneuver. Better they should announce a halt to all silver sales and accumulate silver bars in inventory instead. Perhaps use the cash to cover the operational costs. Officially, the maverick firm will purchase up to 20,229,671 common shares of Silver Wheaton on the Toronto Stock Exchange (TSX) and New York Stock Exchange (NYSE). Randy Smallwood is President and CEO of Silver Wheaton. He explained, "Our business model has always been focused on making accretive investments and building a strong portfolio for our shareholders. Given the turbulence of current markets, we believe that Silver Wheaton's share price does not currently reflect the high quality asset base underlying the company's robust business model. As such, we believe that at current share price levels, Silver Wheaton shares may represent the best investment option for our shareholders. The initiation of our first ever normal course issuer bid positions us to capitalize on this opportunity."

The Jackass has a deep desire for a broadbased strike against COMEX, in a supply line elimination from the mining sector. First Majestic has announced such a strike, but their move has not resulted in other mining firms to follow. A footnote, the First Majestic CEO has received death threats, according to a Hat Trick Letter client who knows the firm's executive staff personally. See Yahoo Finance (HERE).

◄$$$ PETER HAMBRO REPORTS HOW IT IS VIRTUALLY IMPOSSIBLE TO GET PHYSICAL GOLD IN LONDON... CHINA CONTINUES TO DRAIN THE LONDON GOLD SUPPLY... ASIAN DEMAND IS REQUIRING TREMENDOUS NEED TO DELIVER GOLD TO THE BIG SWISS REFINERS IN THE RECAST BAR SUPPLY CHAIN... THE GOLD LEASE COST IN LONDON HAS RISEN SHARPLY, A KEY INDICATOR. $$$

Petropavlovsk Chairman and Co-Founder Peter Hambro made the news recently, crying out that London has gone dry, the gold barrels empty. The physical gold situation in London is on the edge of panic from dire shortage. Hambro is savvy. He claims that one can infer by various indications a weird dynamic, unusual and not witnessed before. Since the shortage is so steep, the United Kingdom had to ramp up imports from the United States in June to send forward to China. He stated the following.

"My baseline is they [the Chinese] have been buying and the Indians have been buying in enormous quantities. It is virtually impossible to get physical gold in London to ship to those countries. We get permanent requests from Russia [like] would we please sell our physical gold to India and China, because there is no physical, only endless promises. I really worry that the market, that paper market, could be stamped on and people will say [the firm is having] a financial close out." The Financial Times reported on similar gold shortages in London in a clear echo. They cited a sharp rise in the borrowing cost for physical gold in London in recent weeks. The effect is driven by dealers needing gold to deliver to Swiss refineries, where recast and sent to locations such as India. The tightness in the physical market for London Gold is the buzz in most circles of conversation. See Zero Hedge (HERE) and Bullion Star (HERE & HERE).

◄$$$ JPMORGAN LOST 45% OF ITS REGISTERED GOLD STOCK IN A SINGLE DAY... THE JPMORGAN VAULT IS PERILOUSLY LOW ON DELIVERABLE GOLD... THE PUBLICIZED GOLD COVERAGE (PAPER GOLD CLAIMS VERSUS ACTUAL GOLD) HAS GONE HAYWIRE, RISING TO 250:1 RATIO. $$$

In early September, Zero Hedge gave an COMEX & JPMorgan alert that the gold coverage ratio, equal to the number of paper claims through open futures interest for every ounce of deliverable gold, had soared to a record level of 207:1, surely unsustainable. Expectation of the imbalance to be rectified were surprising dashed and done so quickly. On September 16th, according to the latest COMEX vault data, not only was another 157,000 ounces withdrawn on that single day, but the conversion of Registered into Eligible continues. Many suspect accounting fraud and gimmicks. Hence, another 10% of total deliverable gold was adjusted away, leaving just 163,334 ounces of registered gold. It is the lowest level in COMEX history. With each passing day the situation is getting progressively worse. Always remember that JPMorguen is run by evil people, total criminals. They will lie and cheat all the way to the end. They might be balancing their gold with copper in accounting fraud manipulation.

Finally, since aggregate gold open interest has run rather consistently at just about 41 million ounces of gold, the latest ongoing reductions in deliverable COMEX gold means that as of September 15th, a record 252 ounces of gold paper claims to every gold physical ounce of currently available and deliverable gold. The gold coverage ratio is skyrocketing, and exhibits instability to the extreme, even imminent systemic breakdown within all precious metals under the COMEX corrupt arena roof. JPMorgan appears to be floundering, with just 335 kilograms of gold, or less than 27 bricks. The venerable crime center stands just one withdrawal request away from running out of deliverable physical gold. See Zero Hedge (HERE) and SGTreport (HERE).

The events are coming in fast and furious. Observers are noticing big snap events like on September 8th at the COMEX. The common opinion is forming the broad consensus in recent months that the COMEX has almost zero gold and is running a very artificial market. That is euphemism for a deeply corrupted market that does not deliver metal or honor legal contracts. See Zero Hedge (HERE) and Investment Research Dynamics (HERE). The smell of oil and incense for a sacrificial lamb can be detected. Maybe it will be Morgan Stanley the bank. Maybe it will be Deutsche Bank. Maybe it will be some big Japanese bank. Something ugly this way comes, to start the daisy chain event.

◄$$$ TRUCKS LOADED WITH HUNDREDS OF TONS GOLD FROM WORLD WAR II WERE FOUND OUTSIDE MOSCOW... COULD BE TRUE, COULD BE COVER. $$$

A German engineer is claiming to have found trucks loaded with 100 tons of gold, silver, and jewelry buried near a village southwest of Moscow. He used ground penetrating radar devices to determine the location of the trucks laden with riches from the Bank of Smolensk. The cite had been emptied of its riches by Soviet forces during WWII in order to prevent Nazi looting. The engineer's attorney claims the man's life stands at risk. According to his statements, the Soviet secret service took charge of all the trucks. After burning paper money and artworks, the vehicles were buried in mineshafts near Vyazma. The shafts were later covered over to the earth surface. There are six trucks in all, with two separate shaft locations several miles apart at a depth of 15 to 17 meters. That is a lot of detail, if fabricated as a story. It could be that the Kremlin has dispatched the man on a phony chase, with promise of bounty, in order to unnerve, distract, and tease the Western paper merchants who thrive on sanctions. The story seems credible. See Sputnik News (HERE).

UniCredit is Italy's biggest bank by measure of assets. It is planning to cut around 10,000 jobs, equal to 7% of its entire workforce. The bank cited the motive to slash costs in pursuit of higher profits. The planned cuts will be concentrated in operations located in Italy, Germany, and Austria. The layoff count includes the 2700 layoffs in Italy already announced. The bank's CEO Federico Ghizzoni denied on September 3rd of any concrete numbers for potential layoffs, after a report was leaked. The report revealed that the bank was considering eliminating 10,000 positions in the next couple years. See Reuters (HERE) and Zero Hedge (HERE). Expect a slew of big bank job cuts in the next several months from the PIGS region of Portugal, Italy, Greece, and Spain, plus pig lookalike France. The region is in deep economic distress, with the banks hanging by threads for many months. They cannot attract the infinite funds to be sustained, since more insolvent by the month. As quick update, watch Monte Paschi Bank, which just suffered a sudden stock decline near 5%. The smoke means fire and fundamental news of deep distress.

◄$$$ DEUTSCHE BANK TO CUT 25% OF WORKER STAFF... THE CUTS WILL LEAVE THE ONCE PRESTIGIOUS BANK NOTHING BUT A BIG IMMOBILE BOX... D-BANK HAS BEEN IN THE NEWS CONCERNING INSOLVENCY, CORRUPTION, EXECUTIVE SHAKEUPS, AND MORE... SOME BIG UGLY EVENT IS POSSIBLY IMMINENT (GERMAN LEHMAN EVENT). $$$

Deutsche Bank aims to cut about 23,000 jobs, equal to nearly one quarter of total staff. The reduction in workforce will come through layoffs mainly in technology activities and by spinning off its PostBank division. That would bring the total staff down to around 75,000 full-time positions under a reorganization being made final by new Chief Executive John Cryan. He took control of Germany's biggest bank in July with the promise to cut costs. That is a euphemism for dissolving a large portion of the entire business. Cut off the arms and legs, limit the upper torso from shaking around, and not much remains. Reminds the Jackass of an avant guard movie in 1993 entitled "Boxing Helena" with Julian Sands and Sherilynn Fenn. The neighbor cuts off the gorgeous abusive woman's legs after her rejection, and later cuts off her arms, keeping her sequestered in a box, as a gesture of his vengeance. The USGovt is trying to keep DBank in a box, forcing its silence, while its appendages are being removed in a systematic manner. See Zero Hedge (HERE) and Yahoo (HERE).

Furthermore, Deutsche Bank is considering the shutdown of operations in some other countries. The bank is a sprawling Western bank conglomerate. The bank is weighing decision over radical changes that could include scaling back or closing operations in some countries as well as overhauling the bank's executive ranks. The German firm's 19-member supervisory board is discussing those options as part of a broader array of possible strategic shifts as they meet at an annual gathering. Taking in Bankers Trust in 1998 from the Manhattan cold turned out to be a deadly decision for the German flagship bank. See Wall Street Journal (HERE).

Indications are for a big Deutsche Bank shakeup or major event to occur very soon. Michael Snyder is a solid financial analyst. He just received an insider scoop that a major financial event in Germany could be imminent. The conditions are approaching for what he called another Lehman Brothers moment to take place. D-Bank is in control of around $75 trillion worth of derivatives, thus weighed down without adequate capital. C-Bank has settled with $9 billion on legacy litigation over the course of the last three years. It has been plagued and dogged. Most observers tend to regard Germany as the strong core that holds the rest of Europe together economically, but they harbor serious damage that is brewing under the surface. Note the German DAX stock index is down close to 20% from the all-time high back in April, and D-Bank stock is down hard. The turmoil is clear at the largest Germany bank.It has been making headlines for all of the wrong reasons in recent months, having to do with failed stress tests, LIBOR manipulation with London, dismissal of both co-CEO's suddenly, and S&P debt downgrade to three notches above junk. The very large banks do not collapse overnight. They emit warning signs in advance. The common perception is that the corporate culture at Deutsche Bank is deeply corrupt, and the bank has been exceedingly reckless in recent years. When big banks experience serious trouble, they start cutting staff.The massive job cuts that Deutsche Bank just announced are both troubling and highly indicative of imminent breakdown and potential failure, or possibly massive restructure with sold business units. The Jackass was informed several months ago that D-Bank would be split into six or more separate businesses. Time is ripe. See Economic Collapse (HERE).

◄$$$ CREDIT UNIONS ARE IN GROWING DEBT EXPOSURE... NORMALLY THEY DO NOT TAKE ON SUCH RISK, BUT THE BIG BANKS ARE NOT FAVORED AND NOT APPROVING LOANS LIKE IN PAST YEARS... BIG BANKS ARE DEAD HOLLOW REEDS, ACTING LIKE CASINOS, NOT LENDING INSTITUTIONS. $$$

◄$$$ CAR LOAN MATURITY IS OVER 5 YEARS ON AVERAGE IN THE USECONOMY, CURRENTLY AT 65.5 MONTHS WHEN WEIGHTED BY LOAN AMOUNT... A DISASTER IS IN THE MAKING FROM IMMEDIATE NEGATIVE EQUITY ON LOAN GRANTS... WELCOME THE NEW SUBPRIME BOND BOMB, TO FOLLOW HOUSING, WHILE THE MAIN EVENT IS THE CRATERED ENERGY SECTOR. $$$

◄$$$ BIG LAYOFFS ARE COMING TO MAJOR ICON CORPORATIONS DURING THE POWERFUL CHRONIC USECONOMIC RECESSION... THE DAMAGE IS ACROSS THE ENTIRE TECH SPECTRUM, HITTING MANY WELL KNOWN NAMES. $$$

Major job cuts have commenced inside IBM in early September, according to a union tracking organization called Alliance@IBM. Layoffs have been ongoing all quarter long. The sprawling tech firm has an established pattern of making job cuts in staggered events, rather than giant actions. The firm will not disclose the number of people it cuts and is not obligated to report that figure under the WARN act unless it orders a layoff that eliminates 500 people or more at once. IBM tends to discuss layoffs in financial terms, like workforce rebalancing, as they call it within quarterly costs incurred. Recall that IBM took a $280 million charge for rebalancing in 1Q2015, as was reported in April. The same amount of money is expected to be spent in rebalancing this quarter, it was disclosed. Thus the indication for more layoffs in a continuing theme. See UK Business Insider (HERE). The IBM cuts echo the massive job cuts disclosed by Hewlett Packard two months ago. HP plans to eliminate over 30,000 jobs in the next three years. See CNBC (HERE) and Fortune (HERE).

More layoffs in the Tech world, extending far beyond the United States. The targets appear to be widespread across the network and computing industry. The year 2014 was bloody, but 2015 will be worse before it closes. Sony will cut around 1000 jobs as a result of struggles with the smartphone division. It is also clipping 2000 mobile unit workers. Its mobile business, despite solid reviews for its Xperia line of handsets, is nearly non-existent in big markets such as the United States and China.

Microsoft is scaling down its mobile phone activities. In a disastrous move, Microsoft is writing off the whole value of the former Nokia smartphone business it bought last year. They are cutting all 7800 people from the acquired unit. Microsoft (aka Evil Empire) also announced 18,000 job cuts last year, including many from the Nokia buyout. Despite an apparent exit from the phone business, CEO Satya Nadella claims weakly that Microsoft remains committed to Windows Phone products, and will continue working with partners. He means bullying partners.

Citrix had 900 job cuts announced in January within a restructuring. The cuts included 200 contractors, which will save $90 million to $100 million per year. The software firm, which has a great conference call product, continues to compete with VMware, Microsoft, and others in the virtualization and cloud markets. NetApp announced 500 layoffs, equal to 4% of its workforce. This is the third straight year that the storage company has had workforce reductions. The battle is on to attract customers migrating to cloud storage. BlackBerry will continue in consolidations within the smartphone sector. They will work to unite the device software, hardware, and applications business. However, the firm in July again announced it was making job cuts without a specific number given. Qualcomm announced deep cost cuts very soon, which are expected to mean thousands of layoffs. Big hard blows have hit the super cellphone chip firm, such as regulatory issues in China, market share gains by Apple, and the Samsung snub in its latest flagship phone. Qualcomm disclosed on July 22nd it would eliminate 15% of its workforce, amounting to about 4700 jobs. Lexmark, the printer and printer services company, announced plans for 500 layoffs as part of a restructuring related to a couple of recent acquisitions. The $3.7 billion firm based inKentucky employs more than 12,000 people worldwide. See Network World (HERE).

◄$$$ SWISS ECONOMY IS IN CLIMAX OF DETERIORATION... THE MONETARY INFLATION HAS LED TO ECONOMIC DEFLATION (AS IN BUSINESS RUIN AND LIQUIDATION)... THEIR BANK SECTOR IS SHRINKING VERY FAST... EXPORT BUSINESS IS IN TATTERS. $$$

## ECONOMY AS WRECKING ZONE

◄$$$ PHILLY DIFFUSION INDEX IS HARBINGER FOR WORSE ECONOMIC DECLINE THAN ALREADY SUFFERED... CURRENT CONDITIONS HAVE BEEN IN DECLINE FOR THREE MONTHS, CONSISTENT WITH THE PROJECTED INDEX. $$$

Macys announced it is closing up to 40 more stores. The giant department store chain plans to do the shutdowns in early 2016, picking up the pace of its closings. They are trimming the least fruitful branches. The selected stores account for only 1% of total sales, even though they make up more than 5% of chain locations. It also plans to open six new Macys Backstage outlets to sell discounted merchandise, often in the vicinity of shuttered stores. Macys also announced plans to partner with Best Buy, which will sell consumer electronics in 10 Macys stores in the upcoming holiday shopping period. In August, the department store chain (steeped in US history and famous movies) reported disappointing sales and earnings for the second quarter and cut its guidance for the full fiscal year. It has recently lowered its future guidance. For retail chains, store closings have picked up in recent years, particularly those based in malls. They face greater competition from Amazon and other online rivals. They have reacted by shifting more of resources to their own online operations and away from traditional mall locations. See CNN Money (HERE).

◄$$$ ZOMBIE HOMES OVER THE $100 MILLION PRICE LEVEL SERVE AS A WEIRD BUT RELIABLE INDICATOR OF THE US-HOUSING MARKET DISTRESS... BIG PRICE CUTS ARE SEEN AT THE ULTRA-HIGH END. $$$

A top at the high end is an extra indication of the general housing market distress. It is the bigger bubble indicator. It is a more pure indicator since the private equity firms are nowhere involved, buying discounted packages of residential homes from insolvent big banks. Real estate brokers and analysts said there are roughly 20 homes for sale (either officially or unofficially) for $100 million or more in the United States. The figure is up from about around 15 last year. Last year three such properties sold by summer months, while this year not a single ultra-upscale property has been sold. At the same time, sales of properties over $10 million in price have stalled. As the inventory of super mansions rises, so have the price cuts, some being slashed by tens of $millions. Deflation in housing while hyper inflation at the USFed should tell the competent student that QE is not stimulus. The housing market continues its depression. See CNBC (HERE).

◄$$$ CANADIAN OIL PATCH FACES RUIN & WRECKAGE... GANGRENE SETTING IN WITH THE BALANCE SHEETS... THE STAGGERING DAMAGE IS TO BOTH COMPANIES IN THE FIELD AND THEIR BANKERS. $$$

Absence of cash flow is killing many oil patch companies. Current debt cannot be serviced for entire books of oil service loans among leading Alberta lending institutions. The wave of defaults is a grand tragedy on oilfield service (OFS) and exploration & production (E&P) companies which seek more relief on lending covenants. The distressed companies cannot borrow their way out of debt. Their cash flow is wrecked. Equity capital is only available at distressed valuations, which reveal even lower value for the firms. Specialized OFS assets cannot even fetch a decent fraction of replacement cost for large equipment upon sale. The line constantly heard in the oil patch is the shortage of cash flow. Accounting games can fool investors, but the requirement to satisfy lenders is free cash flow. The biggest part of the problem is the oil price cut in half during the last year or more. Another part is the reckless lending with cheap money, an extension of the central bank monetary policy. While keeping the financial sector flush with money, they lured the business sector into the funeral parlor waiting room. Cheap money has indirectly killed not only the emerging market economies, but the North American energy firms. Better put, cheap money bought time but set a trap.

ARC Financial produces a weekly chart calculating revenue, spending and upstream cash flow for the entire Canadian E&P sector for the current and preceding 14 years. Selected data has been reproduced below. MNP added 1998, 1999, and 2000 from prior reports. ARC calculated total revenue from all oil & gas produced, then deducted direct lifting and operating costs, taxes, royalties, and administrative costs. The result is after-tax cash flow, which is the free cash available for exploration, development, dividends, plus the crucial debt servicing. ARC estimated total revenue for 2014 was an all-time record $149.2 billion, generating after-tax cash flow of $67.1 billion, the second-highest in history. Combined with capital inflows from debt and equity and inter-company transfers, E&Ps invested $75 billion on conventional and oilsands capital expenditures. CAPEX in 2014 was also at an all-time record which created fabulous revenue and earnings for OFS.

This year is the opposite, manifestly brutal. ARC expects revenue to plunge 33.6% percent to $99 billion, the lowest number since 2009. Except for the recession, you have to go back to 2004 to find total revenue that low. But because today's production mix is increasingly composed of high-cost oilsands, cash flow is expected to be only $28.9 billion, at 43% of 2014 levels. This is the lowest level of after-tax cash flow generated by producers since 2001. The ARC projected CAPEX this year is only $39.1 billion, 52% of last year's levels, which explains the exceptionally low active rig count. The count is the lowest in many years.

Canada's Big Six banks reported their earnings for 3Q2015. The lenders had total exposure to the upstream oil & gas industry of about $44 billion. Including other sources of debt (bonds, other banks, equipment leasing companies), their total obligations are much greater. It could easily be $60 billion, probably higher. With so many private operators, complete figures are impossible to compile. Free cash flow is entirely inadequate to manage debt. Some E&Ps have less debt than others. Hedges on future production locked in last year at much higher prices has cushioned the problem for some firms. As the hedges expire, they cannot be replaced. The firms are hitting the wall. As they do so, they are cutting staff, slashing dividends, cutting investments, and selling assets, even raising equity. Covenants will be amended and stretched, which serve as guidelines for debt repayment during actual seeding of business operations with capital outlays and expected time duration. Strains are coming to the limit. Many loans are hopeless and cannot be salvaged. Secured debt is taking heavy losses. Unsecured debt is taking near total losses. De-leveraging will become the talk, but it is empty talk. The oil price is too low, plain and simple. Compare to telling a 90 year old man with heart disease, hardening of the arteries, and high blood pressure that he needs to get on a good training program and viable diet. See Zero Hedge (HERE).

◄$$$ THE US-BASED ENERGY SECTOR FACES DEBT DEFAULT EVENTS IN A POWERFUL SEQUENCE... THE CASH FLOW IS INADEQUATE TO SERVICE THE DEBT. $$$

The energy sector damage was detailed in last month's Hat Trick Letter report. Their debt burden cannot be sustained with the current cash flow. What was once a steady but high 50% to 60% debt service ratio of operating cash flow between early 2012 and late 2014 has turned into a debt nightmare. The ratio has risen above 80% with the decline in the oil price. The debt defaults will accelerate rapidly.

◄$$$ FREE TRADE ZONES ARE FAR MORE EXTENSIVE THAN THE JACKASS IMAGINED IN PAST MONTHS... THEY ARE DOTTING THE ENTIRE UNITED STATES LANDSCAPE, HITTING ALL STATES. $$$

Free trade zones are springing up all over the United States. They are just not in the news, since most are foreign owned. Witness the early stages of commercial colonization, with China playing a giant role. When the USDollar suffers its vanishing act, replaced by the Scheiss Dollar, the stress and dire need for cash will change the entire landscape. The American theme will be transformed into producing tangible goods in order for export, so as to generate foreign cash flow. The US nation must relieve its staggering trade deficit, which soon will not be financed by monetary printing and forced foreign debt purchase under military threat (or terrorist threat). Another angle must be mentioned. The free trade zones might soon in the near future be the only locations where actual currency exchange is brisk, where actual Gold & Silver purchases take place, where foreign businesses choose to do their banking. The Shanghai Free Trade Zone might serve as a good model for what comes. Take a tour by any US state, where on the map a darker color means more density in number of free trade zones for the state. See Enforcement Trade (HERE) where a nifty device allows to check a given state on the map by point and click. Refer to the map on the linked website (not the map in the report).

◄$$$ CHINA IS BUILDING FACTORIES INSIDE THE UNITED STATES... THEY HAVE BEGUN THE RE-INDUSTRIALIZATION PROCESS FOR THIRD WORLD AMERICA... THE EXODUS FROM BUSINESS OUTSOURCING IN THE 1980 DECADE HAS BEGUN TO SEE THE REVERSE IN CAPITALIZATION SEEDING. $$$

When Chen Mingxu was a boy, US businessmen poured into China, welcomed with tax breaks. Thirty years later, a reverse migration is in progress. Chen finds himself in southwestern Alabama in an expanding business of his own. He employs about 200 locals as owner operator of the first US factory built by Golden Dragon Precise Copper Tube Group Inc. The firm has a $120 million investment in Wilcox County, one of the poorest counties in Alabama. The state ponied up $20 million, winning the bid over other cities and states. They were hoping for the jobs and investments. Last year, Chinese companies plowed $12 billion into the USEconomic base, mostly with small factories. The growth figures are difficult, since it was zero in the early 2000s. Many other such launched businesses can be cited with details.

A Chinese company kicked off a $1.5 billion methanol project in the state of Louisiana, located in the St James parish. It is the largest Chinese green field project to date. Shandong Yuhuang Chemical Co is a private company based in eastern China. The inauguration attracted the attention of the Chinese Consulate General in Houston and the USDept Commerce. Expected to have a role will be the firm's US subsidiary Yuhuang Chemical Inc. It will actually oversee the project with an annual capacity of 1.8 million tons of methanol, once completed in 2018. The Shangdong chairman announced the goal of 20 million tons of methanol per year after 2017. He stated that all output will be exported to China, to help improve the trade balance. See Xinhua Net (HERE).

Witness the fastest growing source of Foreign Direct Investment (FDI) in the country. Chinese affiliated companies now employ more than 80,000 Americans, according to the Rhodium Group based in New York, which tracks cross-border investment. The United States has been de-industrialized since the 1980 decade, when the high tech outsourcing began to abandon the USEconomy, filling the Pacific Rim with US-owned factories. Ironically the cheap labor is now seen to be from the American worker. Think full cycle return to the Third World for the depleted ransacked nation.

As the USGovt prepares for a state visit by Chinese President Xi Jinping at the end of September, their economic relations are undergoing a profound shift. With China facing rising wages, a falling labor supply, and excess capacity, its companies are crossing the oceans to sink roots in neglected corners of the US heartland. They seek skilled labor, offer modest wages, but do not expect to see plentiful fringe benefits. David Loevinger is analyst at the fund manager TCW Group in Los Angeles. He concluded, "Like the Japanese and Koreans before them, Chinese companies want to invest in their export market. As exporters move up the value chain, you increasingly want to get closer to your customers." See Japan Times (HERE). Last year the Jackass claimed that Chinese firms would become important employers of Americans, all in time. My claim was that Chinese banks would becomeimportant lenders for car loans, home loans, and business loans. The first part of the forecast has begun to enter reality.

◄$$$ CHINESE DELEGATION IS MEETING WITH THE USGOVT CREW ON SEVERAL IMPORTANT MATTERS... DEBTOR NATION HOSTS THE CREDITOR NATION... CHINA REMAINS COMMITTED TO BUILDING MAJOR COUNTRY RELATIONS WITH THE UNITED STATES... PRESIDENT XI HAS BEGUN A NATIONWIDE TOUR LOOKING TO SEAL DEALS LIKE WITH BOEING... HE CALLS FOR CLOSER COOPERATION BETWEEN THE TWO NATIONS. $$$

China understands the USEconomy is in chronic decline and dysfunctional, the big US banks insolvent, the USGovt budget broken, the USDollar is wrecked, the USTBond is to be rejected. China has been busily investing in the USEconomy, whether with commercial property or with free trade zones. President Xi seeks mutually beneficial trade and cooperation. Xi will address a business roundtable in Seattle next week, whose port he considers important, almost like with Vancouver in Canada. Boeing is to sell 300 planes to China. Clearly the Asian superpower wishes to use its vast FOREX reserves and USTreasury Bond hoard for useful purposes, rather than to see it frittered away or converted to confetti. See China Daily (HERE & HERE) and China People (HERE) and BRICS Post (HERE).

## SYRIAN REFUGEE CHAOS

◄$$$ THE SYRIAN REFUGEE PROBLEM MARKS ANOTHER IN THE LIST OF DISASTERS PRODUCED FROM USGOVT FOREIGN POLICY... IT IS REPLETE WITH HUMAN MISERY... LOOK FOR GUERRILLA INFILTRATION TO BE DONE EASILY... AUSTRIAN INTELLIGENCE SAYS US ORGANIZATIONS ARE FUNDING IMMIGRATION INTO EUROPE. $$$

Tramp steamer ships are moving tens of thousands of Syrian refugees to Italy, for transfer across Europe. The entire system is has become badly strained. Ruin of Europe and its border integrity might be the USGovt goal. Another motive must be taken into account.Better yet, look for hundreds of ISIS/ISIL guerrillas to infiltrate easily, since no border checks will be effectively conducted. Big nasty events in a series of violence is coming in the next couple months to disrupt Western Europe. The photo shows a ship at a port in Italy. Nobody asks the crucial question of how a typical poor Syrian refugee pays for passage across the sea toward processing at European ports. The Austrian Govt intelligence agency has fingered the USGovt organizations are paying the fees. My gut Jackass belief is the USGovt terror arm does in Langley, through proxies in the Middle East or Israel.

Germany is reimposing border controls with Austria, due to massive refugee flow. City after city across Germany have reported deep strain in accepting tens of thousands of refugees pouring into the country. The mayor of Munich warned that new arrivals would soon be sleeping in the streets. On a single day, 12,000 were taken into Munich Germany on Saturday Sept 19th, and 24,000 Muslim immigrants landed in Munich on that weekend alone. All train services between the two countries were temporarily stopped several days ago, as police sought to secure the border. See UK Telegraph (HERE) and Russia Today (HERE) and UK Express (HERE). Syrian refugees were scheduled to hit the United States shores, but in very small numbers relatively. The USGovt is busily setting up 180 processing centers for the expected 10,000 refugees. Look for them to seek voting rights and be taken in by Obama Care for free health care. The trades unions are all in a buzz, excited over the prospect of building hundreds of new mosques across the country. It would all be paid by the USFed printing press, as in free money toward lifting the sluggish USEconomic recovery. See Zero Hedge (HERE).

◄$$$ GERMANY IS BREAKING RANKS WITH USGOVT OVER SYRIA... A POLAR SHIFT CAN POSSIBLY BE CITED... TO DEFEAT ISIS MEANS TO OPPOSE THE USGOVT SINCE IT IS A LANGLEY CREATION... EUROPEAN UNION MIGHT BE MAKING INITIAL BREAK FROM THE UNITED STATES ON A MILITARY FRONT... OPPOSITION TO NATO RULE HAS BEGUN. $$$

Germany surprisingly left the alliance formed together with the United States which intended to block Russia's entry into the Syrian conflict. Minister of Defence Ursula von der Leyen told Der Spiegel that she welcomed president Putin's intentions of joining the fight against the extremist organization Islamic State. They share mutual interests. Foreign Minister Frank-Walter Steinmeier announced the establishment of a joint venture between his office, Russian Foreign Minister Lavrov, and their French colleague Laurent Fabius toward the aim of bringing the Syrian civil war to an end. The United States has a role in the civil war, an incendiary role where the USMilitary drones have killed hundreds of civilians, and destroyed market places. The US objective appears to be nation wrecking (versus nation building), destroying the national infrastructure, ruining the ability of the nation to even feed itself. Thus the refugee flow arises.

The Russian Navy has planned naval drills off the Syrian coast, in a show of strength and a knock on the door. Russia would keep delivering weapons to the troops of Syrian loyalists to President Bashar al-Assad in support of their struggle against the extremist organization in Islamic State (ISIS). In a typical insincere devious manner, the USGovt warned that Russian involvement might worsen the refugee situation, which is a primary US objective. Washington officials under Secy State John Kerry might have changed their position, suddenly willing to work with the Kremlin. Perhaps they are afraid of being identified closely with ISIS after all.

German Minister of Defence von der Leyen wants to expand the deployment of the Bundeswehr in Iraq. It is the German Defence Force. The Bundeswehr would be ready to continue its successful work in Kurdish regions in cooperation with the Iraqi Govt. First steps apparently have been undertaken. Germany delivered medical supplies, helmets, and hazard protective masks. Whether the German response was a result of the refugee influx or terror threats is still unknown. The entire situation is chaotic and clumsy. Russian Foreign Minister Sergey Lavrov called into question the effectiveness of the US-led coalition against Islamic State. The coalition informed Lavrov that the USMilitary did not give clearances to their fighter pilots on bombing missions, even though they clearly located and identified Islamic State positions. In other words, the US is protecting the ISIS guerrillas which run wild under Langley orders. Lavrov is on record as accusing the USGovt of running the ISIS legion. See Russia Insider (HERE) and Investment Watch (HERE) and South Front (HERE) and SOTT (HERE).

The potential for widening rifts is clear and real. Still the entire commercial front in the European Union is aligned with sanctions against Russia, in a suicidal traipse following of the US lead. Huge change of direction for Britain and Germany can be noted, as immigrant refugees broke their backs at a time when the Russian sanctions broke their economies. Opposition to the USGovt is stark and in the open. Observe a crack in the armor or the wall, a start. The US-led sanctions against Russia have become interwoven with the EU participation with Russia against the ISIS, which is a hidden USGovt terror organization. This is very complicated, and such a bizarre destructive set of dynamics has never been seen before in modern Western history.

To defeat ISIS means to oppose US since it is a Langley creation, first over Syria, then over Ukraine later. In time the Jackass expects the United States to be recognized as the rogue nation. The Arab Spring is a terrorist initiative sponsored by the USGovt extended over several years, to cause destruction of political and economic structures in the Middle East. It operates under cover of installing democratic rule in displacement of monarchies that has lasted a thousand years. It is one of the most destructive and least successful in USGovt foreign policy history, an Obama blemish to the extreme. The next important shift might be European opposition to NATO interference in their political rule and affairs. See Fifth State (HERE).